Coronavirus Job Retention Scheme Update

You will be aware from our previous emails that the Coronavirus Job Retention Scheme (“CJRS”) is changing for furlough periods after 1 July 2020 to enable employees to work part time during their periods of furlough known as “flexible furlough”. Summarised below are some important points you need to be aware of to address each of the following questions:

 

Who can be furloughed from 1 July?
How do furlough periods and CJRS claim periods work?
What are the submission deadlines for claims up to 30 June 2020 and after 30 June 2020
How does the flexible furlough scheme work?
How are employees’ “usual hours” calculated?
How much can be claimed under the CJRS and how much is paid by the employer?
How many employees can be furloughed at any one time?
What needs to be documented regarding flexible furlough?
 
We are here to help so please contact us if you wish to discuss any of these changes.

 

Who can be furloughed from 1 July?

• These are referred to as “qualifying employees”
• Qualifying employees must have completed a full three weeks’ of furlough between 1 March and 30 June; there is no requirement for the employee to be on furlough at 30 June.
• If an employee has not completed a full three weeks of furlough between 1 March and 30 June then employers will not be entitled to make a claim under the CJRS.  
• The only exception to this is that employees returning from statutory parental leave can be furloughed for the first time after 1 July as long the employer has already made a previous claim for other furloughed employees.

 

How do furlough periods and CJRS claim periods work?

• The minimum period of furlough is also changing. Before 30 June, the minimum length of time for which an employee can be furloughed is three consecutive weeks.  However from 1 July, the furlough periods can last any amount of time and there is no minimum period.  You can change employees hours by agreement to suit the business needs.
• Whilst there is no minimum furlough period after 1 July, the minimum claim period under the CJRS is seven calendar days unless the period crosses a month end.  All claims must start and finish in the same calendar month.  Where periods of furlough span a month end, the days in different months must be claimed for separately, as part of a claim for the month in which they fall.  The reason for this is to reflect the fact that the CJRS rules on employer contributions are changing each month.
• Employers can only make one claim for any period, so must include all furloughed or flexibly furloughed employees in one claim, even if they are paid at different times. Overlapping claims are not permitted. The government has produced several flow diagrams to illustrate this.
• Where possible, it is advised that claim periods should be matched to the dates which employers process payroll. When claiming for flexible furlough periods it is advisable to wait until there is certainty over the actual hours which employees work during a claim period before submitting a claim.

 

What are the submission deadlines for claims up to 30 June 2020 and after 30 June 2020?

• The deadline for submitting claims for the period ending on or before 30 June 2020, is 31 July 2020.
• Claims for July can only be made from 1 July onwards.
• If a period of furlough crosses from June into July, separate claims will need to be submitted to cover the days in June and the days in July.  This will apply the same for all monthly cross overs.

 

How does the flexible furlough scheme work?

• Under the flexible furlough scheme, from 1 July qualifying employees will be able to work as many hours as agreed with their employer. This is a change from the rules up to 30 June where the employee is not allowed to carry out any work for their employer while on furlough.
• There is no minimum time period, so the hours worked compared to the hours furloughed can change as frequently as you wish, monthly, weekly, or even daily, subject to keeping accurate records.
• Employers will need to pay employees their normal pay in full (i.e. the pre-furlough rate of pay) for any hours actually worked.
• Employers will then be able to claim under the CJRS scheme a pro-rated furlough grant for any hours not worked by the flexibly furloughed employees. This is calculated based on an employee’s “usual hours” minus the hours they actually work.
• It is therefore important that information regarding flexibly furlough employees is properly maintained and recorded.  For every claim period employers they will need submit for each employee:
  - the employee’s usual working hours;
  - the actual hours they work; and
  - their furloughed hours
• The government’s JRS calculator has been updated to include flexible furlough calculations.

 

How are employees’ “usual hours” calculated?

• For employees on fixed hours, their usual hours will be calculated based on the hours they were contracted to work at the end of the last pay period ending on or before 19 March 2020.
• For employees on variable hours, usual hours will be based on the higher of the average number of hours worked in the tax year 2019/20, or the corresponding calendar period in the tax year 2019 to 2020 (including periods of paid annual leave or non-discretionary overtime).
• HMRC have issues guidance on “Steps to take before calculating your claim” which includes details on how to work out employees’ usual hours and furloughed hours

 

How much can be claimed under the CJRS and how much is paid by the employer?

• June 2020 - No change to the current position.  i.e. the Government will pay 80% of wages up to a cap of £2,500 per month as well as the employers’ national insurance and pension contributions for the hours the employee doesn’t work. 
• July 2020 - the Government will continue to pay 80% of wages up to a cap of £2,500 per month as well as the employers’ national insurance and pension contributions for the hours the employee doesn’t work. Employers will have to pay employees for any hours they work under the flexible furlough scheme explained above. 
• August 2020 - the Government will continue to pay 80% of wages up to a cap of £2,500 for the hours the employee does not work.  However, employers will now be expected to pay the national insurance and pension contributions for hours not worked as well as all costs for any hours worked under the flexible furlough scheme.  
• September 2020 - the Government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work.  Employers will pay the national insurance, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500.  Employers will also pay all costs for any hours worked under the flexible furlough scheme.
• October 2020 - the Government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work. Employers will pay the national insurance, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500.  Employers will also pay all costs for any hours worked under the flexible furlough scheme.
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• For all periods, the cap on the furlough grant will be proportional to the hours not worked if the employee is working some hours under the flexible furlough scheme.

 

How many employees can be furloughed at any one time?

• To prevent employers using flexible furlough where employees haven’t previously been furloughed, amended guidance has introduced a new maximum number of employees for which employers can claim.  After 1 July the number of employees an employer can claim for in any claim period cannot exceed the maximum number of employees on furlough at the same time in any period prior to 30 June.
• This could potentially create issues for employers who previously rotated employees on and off furlough, but who might now wish to have everyone working part-time.

​What needs to be documented regarding flexible furlough?
The guidance states that a “written agreement” confirming a flexible furlough arrangement is needed.
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It is therefore advisable for employers to ask employees to sign to confirm what hours and shifts they will be working when flexibly furloughed, to avoid the risk of confusion or potential disputes in the future.

For every claim period employers will need submit for each employee:

• the employee’s usual working hours;
• the actual hours they work; and
• their furloughed hours

We can help you put flexible furlough agreements in place, so please contact us if you require any assistance.